2024年氣候變化展望

Looking back on 2023, the investment theme of climate change was subject to a lot of volatility throughout the year, ultimately underperforming the market overall. A challenging period spanning the third quarter and into October was partially offset by a strong end to the year, as the market grappled with the impact of changing interest rates, slower growth in renewable energy investment, and a weakening outlook for electric vehicle demand.

Interest rates tend to have an outsized impact on companies exposed to the climate-change theme, given it is naturally capital-intensive. Be it a wind turbine, a solar installation, upgrading a product for better energy efficiency or buying an electric vehicle—these are all more capital-intensive decisions than their alternatives.

Looking ahead to 2024, there are three drivers or catalysts that we think will be important in the coming year.

1. Valuation is paramount

If recent years have taught us anything, it is that having valuation discipline is more important in this theme than ever before. Buying at the right price has been just as important as buying the right companies.

Recent examples would include big cycles of performance in the sub-themes of hydrogen manufacturers or residential solar companies. Volatility can be helpful in offering active investors opportunities to buy and sell, but that requires an approach that allows asset managers to respond to those valuations.

The macroeconomic backdrop has, at least for now, turned more favorable. We are conscious that consensus has shifted to a scenario in which the global economy avoids a recession. That could easily change again, and we need to be mindful of that and react to valuations through 2024 as the market grapples with each incremental economic data point.

2. Commitment to decarbonization remains strong

Despite a lack of incremental positives in 2023, the broad commitment among policymakers and civil society to climate change mitigation and decarbonization remains strong. We expect that corporate and government commitments to decarbonization will play a major role over the medium term. If anything, the theme remains even more necessary as we drift toward a scenario in which limiting warming to 1.5°C above pre-industrial levels is starting to look unrealistic.

3. Interest-rate normalization

We think that interest-rate normalization will be a key trend for the space in 2024, the markets currently expect multiple interest-rate cuts across major economies during the year. This should provide some economic stimulus, improving the economics of climate-change investments, and increasing the availability of long-term capital to invest in the climate theme.

Possible risks ahead

It goes without saying that geopolitical issues or a potential recession would be unhelpful for equities in general. However, the issue that stands out to us as a source of risk is the US election in November 2024. Regardless of how likely or otherwise the eventual outcome is, 2024 is likely to see peak fear around a potential change to legislation in the United States and its Inflation Reduction Act. As such, we think further volatility is to be expected.

Given this ongoing volatility, we believe the market’s short-term focus will present us with some strong long-term investment opportunities. We continue to see the themes of decarbonization and deglobalization defining the years ahead.